How to Sue a Multinational Corporation in PNG

With PNG’s developing economy growing at an extraordinary pace, the country is now host to more multinational corporations than ever before. As some of the world’s biggest global companies move to exploit PNG’s large mineral, gas and oil reserves, there arises the inevitable situation of friction and even conflict between these multinationals and their partners and the local landowners of PNG.

There is a long list of such confrontations in PNG from the early example of BHP’s Ok Tedi to the more recent player ExxonMobil’s PNG LNG project; and usually, when these confrontations translate into legal proceedings and messy negotiations, big business usually wins with the support of the government (always a minority shareholder).

Indeed, PNG’s statutes require that all litigation related to natural resource projects in PNG be brought to case in PNG. This, along with the possibility of multinationals being held accountable for their actions in their home nations, makes sense and is standard operating procedure around the world.

A PNG example of this is when in 1994, PNG landowners sued BHP in the Supreme Court of Victoria in Melbourne, Australia alleging that BHP’s operations at the Ok Tedi copper mine caused destruction of the surrounding environment and of their traditional lifestyle. BHP and the plaintiffs reached an out-of-court settlement in 1996.

But, as recently debated in the US, this doesn’t exclude the current possibility of any non-US plaintiff lodging a lawsuit in the United States against any multinational, even if those multinationals don’t have a direct affiliation with the US.

The reason? A 1789 law called the Alien Tort Statute (ATS) that allows US federal courts to hear “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” This 18th century law was unearthed by human rights lawyers in the 1980s and is being increasingly used against U.S. corporations whose work overseas has landed them in hot water.

This was the path followed by a group of Bougainvillean landowners and their representatives when they filed a suit against Rio Tinto under the Alien Tort Claims Act in US federal court in 2000. The plaintiffs allege that:

Rio Tinto was complicit in war crimes and crimes against humanity committed by the PNG army during a secessionist conflict on Bougainville;

environmental impacts from Rio Tinto’s Panguna mine on Bougainville harmed their health in violation of international law; and

Rio Tinto engaged in racial discrimination against its black workers at Panguna.

“Specifically, the plaintiffs allege that improperly dumped waste rock and tailings from the Panguna mining operations harmed the island’s environment and the health of its residents. They allege that Rio Tinto engaged in racially discriminatory labour practices at the mine by paying local black workers lower wages than white workers and by housing black workers in poor conditions. In 1988, residents from the Panguna region began protesting Rio Tinto’s labour and hiring practices as well as the environmental harm caused by the mine; eventually these protests escalated and some became violent. The PNG Government responded to this uprising with an attack against civilians. A decade-long civil war followed (1989-99), in which Bougainville sought independence from PNG and during which the plaintiffs allege that Rio Tinto was complicit in war crimes and crimes against humanity by the PNG army.

Rio Tinto sought dismissal of the case, which the district court granted in 2002. Rio Tinto argued to the trial court that the case raised questions that are “nonjusticiable” (not appropriate for resolution by a US court) because they involve acts of state and political questions, and because ruling on them would breach standards of international comity.

The trial court agreed, relying in part on a letter from the US State Department favouring dismissal. The plaintiffs subsequently appealed. In August of 2006, the US Court of Appeals overturned the dismissal; a three-judge panel of the US Court of Appeals rehearing the case confirmed the reversal of the lower court’s dismissal in April 2007. The US Court of Appeals, in August of 2007, granted Rio Tinto a rehearing en banc with a full panel of 11 judges.

In December 2008, the Court of Appeals decided to remand the case back to the district court for the lower court to determine whether the plaintiffs were required to exhaust the remedies in their home country prior to filing the lawsuit in the US. After another rehearing en banc before the court of appeals, on 26 October 2010 the court referred the case to another judge to explore the possibility of mediation. One appeals court judge dissented from this order arguing that it was inappropriate to for the court to consider mediation before it determines whether it has jurisdiction over the case.

On 25 October 2011, the Court of Appeals reversed the lower court’s dismissal of the case. The court upheld the dismissal of the claims regarding racial discrimination and crimes against humanity, but it reversed on the plaintiffs’ claims regarding genocide and war crimes. The case will return to the district court for further proceedings on the genocide and war crimes claims.”

As the debate continues to rage in the United States as to whether or not the Alien Tort Statute should be used at all, cases have still been lodged under its premise. The latest of these suits has been brought against Shell by a group of Nigerian villagers who have accused Shell for aiding human rights abuse in the Niger Delta.

With human rights observer organisation Amnesty International active in PNG and periodically releasing damning reports on Barrick Gold’s track record at Porgera, it makes one wonder when the next landowner group will use the ATS to lodge a suit against another multinational.

No doubt some are already watching with keen interest the outcome of the Rio Tinto lawsuit.